The impact of an ESG nudge on retail investor engagement in sustainable finance: evidence from an investment decision experiment

业务 投资(军事) 财务 公司财务 投资决策 持续性 影响投资 行为经济学 新兴市场 政治学 生态学 生物 政治 法学
作者
Glen Hutchings
出处
期刊:Sustainability Accounting, Management and Policy Journal [Emerald Publishing Limited]
卷期号:16 (6): 1807-1830
标识
DOI:10.1108/sampj-10-2024-1104
摘要

Purpose Retail investors have a significant role to play in transitioning economies to a more sustainable future, yet their participation remains limited. Drawing on insights from nudge theory and behavioural finance, the purpose of this study is to investigate whether an environmental, social and governance (ESG) nudge, embedded within corporate sustainability reports, influences the investment decisions of retail investors. Design/methodology/approach An investment decision experiment is used to evaluate the effect of a simplified, commensurated score (the ESG nudge) on retail investors’ ability to distinguish between companies based on sustainability attributes and on their subsequent capital allocation decisions. Findings The ESG nudge significantly increases investment in companies with stronger sustainability attributes. In contrast, the same information expressed in less readable textual disclosures does not produce a comparable effect. These findings suggest that disclosure format plays a critical role in determining how sustainability information is perceived and used by retail investors. Practical implications To enhance sustainable investment outcomes, sustainability standard setters should consider not only the content but also the presentation format of ESG disclosures. Commensurated, easy-to-interpret indicators may be more effective than detailed but complex textual narratives in guiding retail investor behaviour. Social implications Disclosure of effective ESG nudges within corporate sustainability reports could enhance the efficiency of sustainable finance markets and contribute to a more sustainable future. Originality/value To the best of the author’s knowledge, this is the first study to test whether an ESG nudge, embedded within corporate sustainability reports, influences the investment decisions of retail investors. The findings suggest that behavioural interventions within existing disclosure mechanisms can enhance retail investor engagement in sustainable finance. The development and reporting of standardised ESG nudges may offer a valuable complement to corporate sustainability reporting and future mandated textual disclosures.
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